First off I'd like to congratulate you for the forum.
I've read many things in many different places thus fa and I think it's great to see people in teh industry actually wanting to help customers, regardless of $$ involved/ etc.
Many communities forums do many great thing for people-from bunnies to cars, fishing etc.

Speaking of help...I'd like to ask for advice.
Wife and I are looking for a house + mortgage in Central NJ ....and we are first time home buyers to boot.
Considerign the info/details listed below I'd like to ask for a honest opinion as to:
1. What type of program woudl be best for us?
2. What should we qualify for (as estimated against today's rates)
3. Where do we go?

Properties of interest: Central NJ (Old Brdige, Matawan, etc + surrounding areas).
Property price range: $300K to $400K max.
Property tax range: $5000 to $7500
Property type: single fam., OO, primary residence

Income: $50K for me; $62K + $15(part time) for wife
FICOs: 795 mine; 805 hers (last checked 4 months ago; no changes since)
Assets/etc: $90K savings; $6 IRA (which can be used towards closing I'm being told)
Debt: average of $300 usage per month (in general), being paid off every month (no CC debt; 2 cars paid off; no other loans etc.)

Loan type of interest: 80/5; 30yr fixed
We belive that we can put down about 15% and would liek a "normal" traditional loan for 80 plus 5 (or whatever the remainer is).


I think we in good shape overall, but without being a professional I don't know what do we actually qualify for, and at what rates/terms...
Given our situation:
Are any first time home buyer programs available for us?
If so, do we even qualify for any?
What rates/terms can (and should) we count on?
What lenders should be consider?
Even if we do know what we should do, how do we actually find a reputable mortgage provider (broker/lender/etc)?

I guess just like countless other consumers trying to wet their feet in home ownership we are simply a bit affraid of not only choosing the wrong path, but also of beign taken "for a ride." We've been looking for a house for a while now; made a couple of offers on 1 house before which didn't go through (luckily for us, as the house almost got flodded a month later). We were pre-approved by ****quest for a loan then (not sure if I am allowed to name names here). And just like many others, the more I learn, research and know - the more weary I become.

Sorry for the long post and thanks for reading.
Any help and advice will be greatly appreciated.
Thank you.
-Mike

BUMP for the "day crew."
Are we in that bad of a situation that it's not even worth a reply?

Thnx.
-Mike

Lots of reading, sorry. I looked yesterday, but I'm in mortgage, I read numbers.

It sounds like slam dunk deal, I would do it in a heartbeat, but I don't like going outside of the area I know well. You would probably be looking at a 75/10 loan rather than an 80/5. I will give you a quote of what I would give you as soon as my banks website is fixed.

Hah, yes, sorry for writing so much nonsense.

I'll try to simplify; programs of interest:
Option 1:
85%LTV full, no PMI, no points
Option 2:
80/5 split, 30yr fixed, no points, no prepayment penalties
Option 3:
85%LTV full, discounted LPMI, no points.

Variation for these options:
Can consider discount point(s), depending on their worth (listed no points for easier comparison).
Can add seller funded 2-1 buy-down on either primary choices (but in general wouls rather go with long term benefit over a short term sugar coating).

Purchase price limit? $400K...........but anticipate something around 370-380. With 60-65K down loan amount would end up below 340K (right?).
Let me know what you (and others) think of these choices and what's the best we can do. All help and opinions greatly appreciated.
Thank you,
-Mike

Well, I think avoiding the mortgage insurance is not what you should be focused on, as it is tax deductible now for certain individuals. The rates on 1 loan with MI are going to be much more favorable than the options you listed. My site is still down so I can't get the rates unfortunately. Why are you so concerned with points? That is why I do loans, I like to get paid for work. The other option is making what's called YSP or yield spread premium. That basically means giving you a higher rate so the bank pays me. Also, why would you want a 30 year fixed with no prepayment penalty? If you are planning on refinancing in the future, go with an ARM loan at a lower rate that will stay fixed for the amount of time you plan to wait before refinancing. No point in paying a higher rate on a 30 year fixed if you don't plan on keeping the loan for more than 3-5 years. Welcome to mortgage planning 101. I;ll get back to you as soon as I can with more info.

Hey,
Thanks again.
I was under the impression that PMI is only tex deductible up to a certail income level; I think I ead it was somewhere aroudn 110K....and out total income will be above that.
Aside from this, I cant tell how long we'll stay there, but right now there is no plans to move shortly or do anything drastic. We've been saving up for a while to finally buy a place to call our own. And althought he statistics say we'll movev in p5-7yrs anyway (or something similar) I don't know what will happen. We'd like to obtain a safe, sensible and favorable loan for today's market conditions. I certainly don't want to become a CNN headline in a couple of years and read my own "how my rate reset and I can't pay my mortgage" idiot ARM borrower story. I'm ARMs/etc serve their purpose and many people can benefit from them, yet I somehow doubt they'd be good choices for us.
Let me know what ya thinks.
Thanks.
-M

As far as the mortgage insurance goes, talk to your CPA, I'm not one and don't take my advise.

Well then, if you don't think you will sell or refinance in the next three years you should consider a 30 year fixed with a 3 year prepayment penalty. The rates would be much more to your liking.

I think the ARM would serve a purpose in your case because you are buying as a first time home buyer, you will take a hit for that. If you bought with a 3/1 ARM and in 3 years refinanced, you would avoid the hit for first time home buyer. At that point if you think you would stay in the home much longer take a 30 year fixed with a 3 year prepay and play it safe. Prepayment penalties are not a bad thing, if your home increased significantly in value you can take a 2nd mortgage or a HELoC to pull cash out without paying the prepay. If you choose not to take a prepayment penalty and your rate is 3/4% higher because of it, that costs you $200.00 every month. Lets say you wait until year 7 to refinance or sell, you just cost yourself 16,800 worth of interest, you don't want that. If you sell in the first three years you pay 11,200.00. I say if you are sure you won't sell or refinance in the first three years, take the prepayment penalty.

Just an idea, now is definitely the time to buy though.

I'll double check the ifo regarding MI, but I don't feel comfortable with ARMs (read oen too many articles I guess).
We're lookign for a place to stay, with no anticipation of moving very soon. Granted, anythign can happen and I may have to sell regardless of planning in a year...but these are the things none of us can predict.
Yet, somehow I don't forsee much more favorable rates for the near future, and don't want to be in a situation where we HAVE TO refinalce in 3 years. With a a fixed we'll have it as an option. Sure, maybe we'll end up shelling out more this way, but I guess that's the price people have to pay for security(I uset eh term softly here).

I think we'd do best with a 30yr fixed program. 80/5 or maybe full 85....not 100% sure on these.
I'd like to be able to tie in any points to my negotiations, and see if we can ask the sellers to pay them. This way we'd get it's benefit without taking $$ out of our own pockets, right?

Here's more info on MI and it's Tax benefits for anyone that is interested. This is a great tool to pitch to clients who may have to consider MI...

http://www.mgic.com/education/mioptions_tax.html

BUMP for more ideas...

-M

You should go conforming and should never have to worry about a rate increase because of no pre pay.

I would say a fair quote for your deal would be:

1 Loan @ 6.875% no PMI insurance or

2 loans---- first @ 6.625%
Second @ 8.5%
No Prepays.

I would take the fixed over the arm because the difference in pricing is very small.

**** Both options would pay the broker 1 point on the back end of the loan. You can lower your rate around .25% if you pay the broker up front.

Info Based on 07/20/2007 rate sheet.

M-M,
Thanks for sharing.
I received a couple of seemingly sensible offers, yet they did seem a bit high.
Take a look at these nubmers (nevermind that payback time is different b/w option 1 and 2; seems this LO didn't calc it all out well enough):

How do these stack up?
Should I be searching for something with the numbers you listed (6.25 on the 80/5 split)?

I have no problem with a honest pay for honest service, but it seems to me that the quotes I received thus far (with 1 week old figures) seem a bit rich.
Thank you.
-M